The Green New Deal: Whither Capitalism?

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By Güney Işıkara and Ying Chen

The Green New Deal resolution by Alexandria Ocasio-Cortez and Ed Markey sparked an immense amount of discussion on all layers of political discourse, national and international. The way Ocasio-Cortez, Sanders and many others phrase the problem in the broader context of social, economic, and environmental grievances caused by capitalism is crucial for setting the terms of debate and struggle. This opens up space the left can use to address such issues in a systematic way rather than being content with symptomal healing. In fact, countless contributions have already been made on theoretical and tactical grounds. In this piece, we build on those contributions, and unpack the dynamics inherent to the capitalist system that would need to be addressed in the ongoing discussions. We also shed light on the limitations of a market-based and growth-centered approach to tackling climate destabilization, while offering other domains of political intervention such as property relations and demarketization of subsistence.

A Big Step Forward: Contextualizing and Re-Politicizing Climate Action

The idea of a Green New Deal is not new. It goes back at least to 2008, when a group of influential people who referred to themselves as The Green New Deal Group called the UK Government to adopt a program of massive investment in renewable energy and provision of the green economic transformation with low-cost capital, creation of green jobs, and the like. In the same year, some economists in the U.S. published a report, outlining key strategies to address global warming and transform the country into a green economy, while creating jobs. This was also around the same time that the United Nations Environment Programme began to promote the idea of a Global Green New Deal. The Green Party of the United States has also been campaigning for a long time for a Green New Deal that links green transition to a broader social and economic program.

However, most of the approaches to the problem are rather disorienting and blurring. The concept of the Anthropocene, for instance, paints a picture where an undifferentiated humanity is responsible for climate change, and thereby obscures the underlying specific relations, leaving the stage to a depoliticized, technocratic debate between climatologists and economists.  

What is new about the recent Green New Deal resolution sponsored by Ocasio-Cortez and Markey is that it puts climate action into the broader social context and moves away from the prevalent depoliticized framings. It recognizes the great inequality between the carbon footprint of the rich and the poor both globally and in the US context. The resolution includes a job guarantee with a family-sustaining wage, provision of high quality health care for all Americans, affordable and safe housing, economic security, and access to clean water and air, along with measures to dramatically expand and upgrade clean, renewable power sources, build new capacities, increase energy efficiency, and make public transportation a clean and affordable option. It recognizes that such an all-embracing transition is only possible through a deep and broad mobilization where the public sector takes the leading role, committing to massive infrastructure investments, providing the adequate capital at favorable conditions, and supporting the vulnerable sections of society by creating secure jobs and extending the realm of public goods and services.

However, there is at least one further issue that deserves particular attention: the systemic, global character of the problem, manifesting itself in asymmetric historical responsibilities of different countries and classes, as well as their current capacities to take action.

Limits of Market-Based Policies

According to the latest IPCC (Intergovernmental Panel on Climate Change) report, the remaining global carbon budget for a scenario with a global warming limited to a maximum of 1.5 degree Celsius above pre-industrial levels is 420 billion tons of carbon dioxide, or, approximately eleven more years of emissions at 2018 rates. This implies that a drastic cut in global emissions is imperative in the next decade.  

The temporal dimension of the problem is at least as important as its size and complexity. A global strategy, even one that successfully reaches the goal of extensive decarbonization, will not qualify as a solution to avoid moving beyond 1.5 degree Celsius if it is implemented too late. This is a knife that cuts both ways. Yes, whatever progress is made in the immediate short- to medium-run is valuable. But it is deficient. No reaction that falls short of initiating a radical, all-embracing, and unprecedented transformation, which is very likely to run counter to the very logic of commodification and accumulation defining our capitalist economies, and hence disrupts them, will not be anywhere close to sufficient. This implies that the problematization of property relations and growth in the conventional economic sense must be part of the discussion.

Market- and incentive-based mechanisms have been among most popular measures proposed by both the left and the right. An important part of what is meant in this rubric is providing consumers and producers via the price mechanism with a set of incentives to reduce their emissions, most notably a carbon tax.

The logic that underlies a carbon tax scheme is the following: the unregulated market fails to take into account the social cost of production. It cannot get the prices correct and hence calls for an intervention to establish the latter. Note the implicit approval of getting the correct social cost of emissions, which are to be added to prices in the form of taxes. Despite the common faith in the accumulation-driven market mechanism, the relevant literature offers a spectrum of from below $1 to around $230 per metric ton of carbon, revealing a severe lack of convention as a result of uncertainty regarding the rate of innovations in the energy sector, the speed of the movement away from fossil fuels, the change in energy demand in response to increasing energy prices, not to mention all the epistemological and technical discussions about the so-called social discount rate.

The German case best exemplifies the inadequacy of a purely market-based response to climate destabilization. In 2007, the German government launched the Climate Change Action Program – 2020 with the target of cutting greenhouse gas emissions by 2020 by 40% relative to 1990 levels, a less ambitious goal than what we need to according to the (usually optimistic) IPCC. It was one of the most comprehensive national plans making use of diverse, mostly market-based mechanisms. Moreover, it was accompanied by the National Action Plan on Energy Efficiency, which, covering the same period, clinched Germany’s title as the world’s most energy efficient country. In terms of climate change targets, the result is impressive and disappointing, motivating and alarming at the same time. By 2017, greenhouse gas emissions were only reduced by less than 30%. Consequently, the target was dropped in 2018.

This demonstrates that incentive-based mechanisms – even on a national scale – are not good enough, let alone sufficient. However, this does not mean to dismiss the need for massive reforms (including a heavy carbon tax) in the immediate short-run, but to recognize and confront that remaining within the structural limits of the current social, institutional, and economic context is itself paving the road to hell. To be a realist today does not mean to only seek for what can be done under political constraints, but to exploit existing opportunities to start to immediately mitigate climate change and at the same time push for radical social change. Putting the Green New Deal discussions into the context of our socioeconomic system and its power relations is hence vital.

Decoupling of GDP Growth from Carbon Emissions?

In order to achieve a one percent growth in global income, a near-one-percent increase in energy use is required. Currently, about 90% of global primary energy supply still relies on CO2-intensive fossil and biofuels, suggesting that economic growth still translates into increasing global emissions into the atmosphere. Although one of the crucial components of GND is to rapidly decarbonize the economy through investment in renewable energy, studies show that even an unprecedented wave of technological innovation would not suffice to globally decouple economic growth from carbon in such a short period of time.

The fact that the US economy has been recently growing with relatively stagnant carbon emissions makes some people, including Barack Obama, believe that a decoupling has already occurred. The International Energy Agency was even keen to announce that the “[d]ecoupling of global emissions and economic growth [is] confirmed” following two years of stagnation in global emissions.

This is misleading on several grounds. First, the early celebration was based on the temporary stagnation in emissions in 2015 and 2016, which did not persist into 2017 and 2018 where global emissions increased by 1.6 and 2.7 per cent, respectively. Second, in the national context, inferences usually rely on territorial emissions related to domestic production. The US is the largest net importer in the world, suggesting that the emissions associated with consumption in the US are significantly greater than its territorial emissions associated with domestic production. Such nation-state perspective on carbon emissions is common, yet it conceals the global nature of the problem. In fact, an important part of the carbon reduction achieved in the Global North in the last two decades can be explained by the offshoring of polluting activities towards the Global South. Even within the Global South, much of the carbon reduction in China, for example, can be explained by offshoring activities to Vietnam and Bangladesh.

Two important respects should be emphasized here. First, global emissions keep increasing with global economic growth. And second, without a global coordination that challenges growth in the form of endless capital accumulation and dismantles the hierarchical division of labor, conclusions based on carbon reduction in individual countries are distorting the dismal truth.

To Grow or Degrow? Or Is There a Third Way?

While the world economy as a whole cannot keep growing in the next decade and at the same time dramatically cut its CO2 emissions, this need not mean to dispense with growth altogether and embrace degrowth. The problem asserts itself as a political question insofar as both growth and degrowth are necessary for different domains, industries, social classes, and countries in a differentiated and selective way.

Instead of recognizing growth as the crux of the debate, however, one must ask what growth means. There is no inherent connection between the growth of marketized output and an increasing living standard for working people. In fact, one of the best established facts in studies on inequality is that the working classes got very little from growth of the pie in the last few decades. Another example would be Cuba, which ranks among the top countries according to the human development index as calculated by the UN, mostly contributed by high life expectancy and literacy rate rather than GDP per capita, and still has one of the lowest per-capita ecological footprints globally.

The fact that the living standard of wage laborers has been delinked from GDP growth has an important implication: their well-being can be substantially increased under circumstances of a constant, or even shrinking GDP. We need not be concerned with maintaining or boosting GDP growth while discussing climate action. On the contrary, revealing and emphasizing the lack of connection between growth and well-being is more fruitful insofar as it demystifies the content of capitalist accumulation.

Obviously, this implies the adoption of a clear class position instead of sticking with green growth, presented as the only politically viable response. Yet the credo of what seems to be politically viable is what brought us here. In addition, not only concerns about well-being, but also the distribution of emissions points to the necessity of a class-based approach: annual per-capita CO2 emissions of the richest 10% is around 5 times greater than that of the poorest 10% in the US. The extreme inequality of carbon footprint within and across countries is not primarily a problem of morality and justice, but a political question regarding the use of environmental commons, and as such, a question of ownership.

What is to be done? Interrupting the Logic of Capitalism

Now we get down to the nitty-gritty. Production as directed by the market mechanism, which puts profit above the satisfaction of human and social needs, is barely compatible with the notion that the living standard of the working classes is increased, while carbon emissions are drastically cut at the same time. If the economy is to be disrupted for the sake of a rapid and radical transformation of the energy infrastructure, production structure as well as consumption patterns, a demarketization of subsistence is indispensable. Both political and economic mobilization is very likely to remain weak otherwise.

The demarketization of subsistence can begin with the universal provision of healthcare and education, affordable housing for everyone, universal access to basic food items, and gradually be extended beyond this immediate realm. To be clear, this is part and parcel of the Universal Declaration of Human Rights. As such, it is not even utopian or too radical, but just incompatible with the drive of expansion inherent to capital, which seeks to commodify all possible spheres of everyday life.

Similarly, pushing for certain changes in property relations is a must for climate action. Fossil fuel companies declare that they will keep extracting and burning all the reserves they own, precisely because they own them! Climate deception dossiers clearly reveal that these companies have been very well informed since the late 1980s about the implications of their actions, and yet, they spent hundreds of millions dollars to manufacture and disseminate misinformation about climate change. The fossil fuel industry must therefore be nationalized to be able to control emissions through quantitative channels in the coming crossroad decade, which is the safest way reaching mitigation targets.

Today, the US holds sufficient economic surplus to support a GND. The real problem lies in that the surplus-owning class refusing to invest into the crucial domain that helps sustain the very ecosystem we currently inhabit, which is as essential as food, clothing, shelter and transportation, if not more so. Hence the expenditure on its preservation, through the Green New Deal, falls within the cost of necessary reproduction of human society. If the surplus-owning class refuses to recognize the priority of spending in climate change mitigation to preserve the ecosystem, to maintain the reproduction of the human society, this is because they are just acting as their landlord counterparts more than four hundred years ago, who were content with idling on the surplus they owned until they were replaced by the bourgeois class who redirected the surplus into productive investment, and hence establishing capitalism as a politically legitimate system.

The public discourse, therefore, should be directed toward one that challenges the political legitimacy of the capitalist system in its capability to tackle the climate change crisis, rooted in its ownership structure and the consequent allocation of resources by means of the relentless pursuit of profit. Furthermore, not only capitalist relations that dominate the operation domestically, but also capitalism as a world system, which imposes a global division of labor and allows leakages of carbon emissions to the periphery, should both be confronted as the lingering obstacle to any effective solutions to the climate change crisis.

Doing the same things as in the two decades following the Kyoto Protocol and expecting a different outcome will flatly fail any meaningful climate action and drag us into abyss. The Green New Deal is a good start for change. The only way to fulfil its promises is to take up a confrontational path, intensify class struggle, spill the discussion of climate change beyond environmentalism so as to challenge and interrupt the logic of capitalism, and move toward a system where production of use-values overrides accumulation.

Photo: Representative Alexandria Ocasio-Cortez (center) speaks on the Green New Deal with Senator Ed Markey (right) in front of the Capitol Building in February 2019. Source: GreenNewDeal_Presser_020719.

Güney Işıkara is a PhD Candidate in Economics, The New School for Social Research

Ying Chen is an Assistant Professor of Economics, The New School for Social Research

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